Question

2013 Individual Tax Rates
Single Individuals
If a Corporation's Taxable Income Is	It Pays This Amount on the Base of the Bracket	Plus This Percentage on the Excess over the Base (Marginal Rate)	Average Tax Rate at Top of Bracket
Up to $8,925	$0	10.0%	10.0%
$8,925 - $36,250	892.50	15.0	13.8
$36,250 - $87,850	4,991.25	25.0	20.4
$87,850 - $183,250	17,891.25	28.0	24.3
$183,250 - $398,350	44,603.25	33.0	29.0
$398,350 - $400,000	115,586.25	35.0	29.0
Over $400,000	116,163.75	39.6	39.6

Standard deduction for individual: $6,100

Married Couples Filing Joint Returns
If a Corporation's Taxable Income Is	It Pays This Amount on the Base of the Bracket	Plus This Percentage on the Excess over the Base (Marginal Rate)	Average Tax Rate at Top of Bracket
Up to $17,850	$0	10.0%	10.0%
$17,850 - $72,500	1,785.00	15.0	13.8
$72,500 - $146,400	9,982.50	25.0	19.4
$146,400 - $223,050	28,457.50	28.0	22.4
$223,050 - $398,350	49,919.50	33.0	27.1
$398,350 - $450,000	107,768.50	35.0	28.0
Over $450,000	125,846.00	39.6	39.6

Standard deduction for married couples filing jointly: $12,200

Quantitative Problem: Jenna is a single taxpayer with no dependents so she qualifies for one personal exemption. During 2013, she earned wages of $121,000. She doesn't itemize deductions, so she will take the standard deduction and her personal exemption to calculate 2013 taxable income. In addition, during the year she sold common stock that she had owned for five years for a net profit of $4,800. How much does Jenna owe to the IRS for taxes? Round your intermediated and final answers to the nearest cent.

Answer 1

Solution:

Tax Year : 2013

Filing Status: Single

No. of Dependants : Nil

Regularly Taxed Income:		$121,000
Long Term Capital Gains		$4,800
Adjustments:
Standard Deduction		$6,100
Personal Exemption		$3,900
Adjusted Gross Income		$125,800
Taxable Income		$115,800
Estimated Tax on Regular income		$24,373
Tax on Long Term Capital Gains @15%		$720
Total Tax Liability		$25,093